Federal bill gives boost to UM's chronic care insurance research

Bipartisan federal legislation introduced last week gave a boost to the University of Michigan’s Value-Based Insurance Design Center and its 10 years of research into lowering costs of chronic disease care through preferred benefits.

The bill, H.R. 5183, the Value-Based Insurance Design for Better Care Act of 2014, instructs the federal government to test the VBID concept in the Medicare program through regional demonstrations.

It was introduced by U.S. Reps. Diane Black, R-Tenn., and Earl Blumenauer, D-Ore.

Under value-based insurance, employers add specially designed insurance plans to their benefit packages that eliminate or reduce co-payments for proven effective treatments or prescription drugs or medications, said Mark Fendrick, M.D., co-director of the VBID Center.

For example, Pitney Bowes, a Fortune 500 company, saved $1 million in employee health costs in one year, when complication rates for asthma and diabetes dropped after the company lowered the out-of-pocket cost of medications, said the University of Michigan Institute for Healthcare Policy and Innovation.

Fendrick told Crain’s three years ago that the University of Michigan, Meijer and Whirlpool Corp. have added value-based insurance to their benefit plans with positive results.

Nationally, companies like Sprint and Safeway also are using VBID, Fendrick said.

A 2012 Mercer study showed that 20 percent of employers with 500 or more employees are using some form of value-based insurance design.

Several health insurers, including Detroit-based Blue Cross Blue Shield of Michigan, have adopted VBID into wellness program designs. The state of Michigan, under its Healthy Michigan Medicaid expansion program, also has added components of VBID, Fendrick said.

The Patient Protection and Affordable Care Act of 2010 included 28 words endorsing value-based insurance design and encouraging its use in the Medicare program by 2012.

It was expected that the U.S. Department of Health and Human Services would have developed implementation regulations. Like most Obamacare provisions, however, delays have been commonplace.

The bill orders HHS to:

Create a demonstration program to test VBID in Medicare Advantage plans for beneficiaries with chronic clinical conditions, including diabetes and heart disease.

Allow Medicare Advantage plans the option to use VBID benefits to lower copayments and coinsurance to encourage the use of specific, evidence-based medications, clinical services and specific high-performing providers.

Prohibit plans from increasing copayments or coinsurance to discourage use of services.

Require an independent review, assessment and report on the impact of the demonstration program.

Expand the demonstration program to allow all Medicare Advantage plans to pursue VBID should the report conclude the demonstration has lowered costs and increased quality for beneficiaries.